Skip to content

The chemistry industry launches new report on the economic benefits of gas-based manufacturing - 13 August 2019

The Australian chemistry industry releases new report on the economic benefits of gas-based manufacturing


Business leaders from the Australian chemistry industry have released a new report highlighting the vast economic benefits of gas-based manufacturing in Australia.

Commissioned by members of Chemistry Australia, the Chemical Sector Economic Contribution Analysis report details the large and valuable contribution the Australian chemistry sector makes to the economy.

Chemistry Australia CEO Samantha Read said the Australian chemistry sector contributes $38 billion to Australia’s GDP and supports the employment of hundreds of thousands of Australians.

“The sector underpins more than 1,600 full time equivalent jobs for every petajoule of gas it uses.  This is important because when you look at other industries that use gas, the number of jobs the chemical industry supports is much higher; 80 times higher than LNG, and 150 times more than the gas-fired electricity generation sector,” Ms Read said.

“We also add $286 million of value to every petajoule of gas used in our sector, which is again much higher than other gas-based industries; 33 times more than LNG, and 68 times more than the gas-based electricity generation.

“Australians receive $277 million more in economic benefit from a petajoule of gas that goes through the chemistry industry than they do from a petajoule of gas going to LNG exports.

“This doesn’t mean these industries are less important to the economy, but it does provide an indication of the value of our sector, and the potential impact of lower chemical sector production on the economy resulting from the current gas crisis.

“The crisis is impacting investment decisions of companies in the chemistry industry today and future investment considerations, which is a significant lost opportunity for Australia.

“In the current climate of slow economic growth and declining economic complexity, we can’t afford to lose investment in an industry that makes such a large and valuable contribution to the economy.”

Ms Read said recent moves by the Federal Government to improve supply of affordable, reliable gas to domestic industries were a step in the right direction, but greater urgency was needed to solve the short-term challenges that are facing the sector.

“Government intervention is necessary to address the dysfunction in Australia’s gas market, so as not to lose manufacturing capability and further strip complexity from Australia’s economy.”

Ms Read said increased supply also needs to be enabled by state governments.

“The moratoria on onshore gas exploration in Victoria must be lifted, and projects such as Narrabri in NSW need to go ahead to ensure there is sufficient gas available in the markets where the gas is used.”

“We hope the Victorian Government will remove the ban on gas exploration and development as it’s hurting manufacturing, especially in the chemistry sector.

“The Acil Allen Consulting report we’ve released today shows that the chemistry industry contributes $11 billion to Victoria alone, with 65,000 jobs dependant on the industry.

“These jobs are at risk until gas supply and price issues are addressed.

“Like the ACCC, we support taking a science-based, case-by-case approach to gas developments rather than blanket bans in Victoria.

“We urgently need additional supplies of gas to put downward pressure on prices to secure manufacturing jobs.

“It’s time for state governments to act.”


Comments from chemistry industry business leaders:

Alberto Calderon, Managing Director & CEO – Orica
A diverse and complex manufacturing sector is critical for a resilient, value-adding and innovative national economy. For Australia, this means ensuring a competitive cost environment for local industry and sustainable pricing for critical inputs such as natural gas.

The Report reminds both federal and state governments how important it is to address the current problems and policy failures in the gas market which have seen domestic prices triple over recent years. But we are running out of time and they need to act quickly before our domestic manufacturing base is further compromised.

This is an unacceptable situation given our natural abundance of gas.

Stephen Bell, CEO – Qenos
As the only manufacturer of polyethylene in Australia, our future depends upon the reliable supply of gas at an affordable price.  Qenos is a strong supporter of projects such as Narrabri in New South Wales and onshore gas exploration in Victoria that would increase gas supply to the market.  

Qenos welcomes the findings of the Chemical Sector Economic Contribution Analysis, confirming the significant role that the Australian chemistry industry plays in supporting jobs and the economy.

Jeanne Johns, Managing Director & CEO – Incitec Pivot Limited
Incitec Pivot Limited welcomes the ACIL Allen Consulting report confirming the importance of addressing the eastern Australia’s current gas crisis for jobs and economic progress. Ensuring affordable gas to Australia’s chemicals industry is critical to the ongoing prosperity of the nation.

Australia’s chemical industry supports more than 1,600 full time equivalent jobs for every petajoule of gas it uses 80 times higher than LNG, and 150 times more than the gas-fired electricity. The chemical industry contribution to the local economic activity per petajoule of gas used is also greater than that provided by either the LNG or gas-fired electricity industries. 

We encourage the Federal Government to take these findings onboard and move quickly with a sense of urgency to address the eastern Australian gas market dysfunction.


Acil Allen Report – Chemical Sector Economic Contribution Analysis

Released today by Chemistry Australia, the Acil Allen Consulting report tables the economic contribution of the Australian chemistry industry, which represents the largest gas-based manufacturing sector in Australia. 

The report estimates the direct and indirect economic value of the output of the Australian chemical industry during the financial year 2017-2018. 

Key data:

  • The chemistry sector drives more than $286 million of local economic activity for every petajoule of gas it consumes
  • This is 33 times more than the LNG industry and 68 times more than the gas-fired electricity generation industry
  • The sector also supports more than 1,600 full time equivalent jobs for every petajoule of gas it uses; this is 80 times higher than LNG, and 150 times more than the gas-fired electricity generation sector
  • Australians receive $277 million more in economic benefit from a petajoule of gas that goes through the chemistry industry than they do from a petajoule of gas going to LNG exports
  • The chemistry industry underpins more than 212,000 full time equivalent jobs across the economy
  • 80 per cent of the chemistry sector is located in Victoria, NSW and Queensland
  • The chemistry sector directly employs 61,458 people in full time equivalent jobs with the bulk of employment concentrated in Victoria (19,550), NSW (19,303) and Queensland (11,372)
  • In 2017-18, the chemistry sector contributed $11.2 billion to NSW GSP, $10.5 billion to Victoria GSP and $6.8 billion to Queensland GSP

Read the report at the following link:

Chemical Industry Economic Contribution Analysis


Media contacts:

Shayna Welsh – swelsh@chemistryaustralia.org.au or 0448 660 443

 

The Australian chemistry industry currently supplies 104 of Australia’s 108 industries and contributes around $38 billion to the Australian economy every year.  The Australian chemistry sector is a significant industrial user of gas, with many of its member companies located on Australia’s East Coast where gas supply has become increasingly expensive and insecure. Gas is particularly essential to the business of chemistry. It’s important for process energy, and it is also a non-substitutable ingredient for advanced manufacturing. The Australian chemistry industry uses Australian domestic gas for its molecular properties to create a huge range of products essential to our everyday lives. These include fertilisers for crops, cleaning products for health and hygiene in homes and hospitals, and smart packaging to keep food fresher for longer.

Back to top